Buying FTSE 100 shares after the stock market crash could prove to be a sound means of making a million over the long run. The index has a solid track record of recovery after its previous bear markets. And it’s likely to follow this trend in the coming years.
With that in mind, here are two blue-chip stocks that appear to offer good value for money after their recent share price declines. Buying them now, and holding them for the long term, could boost your chances of obtaining a seven-figure portfolio.
FTSE 100 retailer Tesco
Tesco (LSE: TSCO) has experienced a period of high uncertainty, despite sales rising rapidly at a time when many FTSE 100 businesses have reported weaker demand. For example, the company’s recent quarterly update showed that its like-for-like sales increased by 7.9%.
However, with it has come increased costs as the company responded to surging demand for home delivery. But this is set to be mitigated by business rate relief and higher volumes.
Tesco also experienced rising demand at its convenience stores in the most recent quarter. Encouragingly, customer perception of its brand improved to the highest level since 2011. This could mean the business has a relatively strong position in what’s a highly competitive retail environment, which could lead to higher returns over the long run.
Clearly, the FTSE 100 stock faces an uncertain future that could mean its price comes under pressure over the near term. However, its investment in new promotions, such as the well-received Aldi price match, and strong position in the rapidly-growing online grocery segment could act as catalysts on its share price over the coming years.
Another FTSE 100 share that could deliver a sound recovery in the long run is beverages business Diageo (LSE: DGE). Its share price has declined by 13% since the start of the year. The forced closure of pubs and restaurants was a major contributing factor in its disappointing operational performance.
The challenges facing the company could continue over the near term, as reduced air travel is likely to mean travel sales come under pressure.
However, over the long run, Diageo could deliver a successful turnaround. Its most recent trading update highlighted the measures it’s taking to reduce costs. Meanwhile, its strong balance sheet also suggests it has the financial position required to overcome short-term risks.
The FTSE 100 business has a diverse range of brands and operations in various countries. This means it could be a major beneficiary of a likely global economic recovery. Add in a high degree of customer loyalty and what appears to be a sound overall growth strategy, now could be the right time to buy a slice of the business. Especially while it appears to offer a relatively wide margin of safety.
Peter Stephens owns shares of Diageo and Tesco. The Motley Fool UK has recommended Diageo and Tesco. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.